Japan’s eateries, stores in shock

by Taiga Uranaka

Reports of the first case of mad cow disease in the United States dealt a blow Wednesday to Japan’s food industry, which is still recovering from the fallout over the September 2001 domestic breakout of the fatal brain-wasting disease.

The government responded by halting imports of U.S. beef. American beef accounted for 45 percent of total imported beef in fiscal 2002.

Officials of restaurants, supermarkets and other beef-related industries scrambled to minimize the impact of the latest outbreak, putting up notices assuring customers their beef was safe or pulling U.S. beef from their shelves altogether.

“The timing is bad. Sales just started to rise after bottoming out last summer,” said Makoto Suzuki, spokesman of family restaurant chain Skylark Co., which also runs Gusto and Bamiyan restaurants. More than 95 percent of beef used at the chain comes from Australia, but U.S. beef is used in some hamburger and steak products. “We are reviewing the beef supply route,” Suzuki said.

Supermarket chain Aeon Co. said it pulled U.S. beef off its shelves following the government’s ban on imported U.S. beef earlier in the day. The sale of U.S. beef will remain suspended until “the situation is clarified,” Aeon said.

According to Aeon, 15 percent of its beef comes from the U.S., while domestic beef accounts for 50 percent and Australian beef 35 percent.

Public-relations officials at McDonald’s Holdings Co. (Japan) were inundated with inquiries from the media since early morning.

“Phones kept ringing off the hook,” company spokeswoman Miwa Sen said.

She stressed that the hamburger chain uses only Australian beef for its patties, and consumers need not have safety concerns.

Yet the discovery of mad cow disease, formally known as bovine spongiform encephalopathy, in the United States, a country considered to have some of the world’s most rigorous agricultural safety standards, will probably have a negative impact on the chain, which has been suffering weak sales amid the prolonged economic slump.

The chain saw monthly sales among stores that have been open for at least a year plunge 17 percent in October 2001, a month after Japan’s first breakout of mad cow disease.

The shock may be even bigger for Yoshinoya D&C Co., which runs the fast-food chain serving “gyudon” beef over rice, as 99 percent of its beef comes from the U.S.

Yoshinoya officials plan to launch a public-relations campaign aimed at convincing consumers that its beef is safe because it comes from a part of the cow that theoretically cannot be contaminated by BSE.

The import ban on U.S. beef will not affect the chain’s operations immediately, as it has about one month’s worth of inventory.

Given Japan’s heavy reliance on U.S. beef, however, the import ban is likely to have a major impact, especially on small businesses.

Takatsugu Nakai of the All Japan Yakiniku Association, a group of mostly family-run grilled-beef restaurants, said he fears the ban might put members out of business.

“Given the large market share of U.S. beef, it is feared the ban will trigger a steep rise in beef prices,” he said. “It will hurt our small restaurants.”

Up to 60 percent of the beef used by its member restaurants is imported, with 45 percent of it coming from the U.S., he said.

“Halting imports is inevitable, given safety concerns, but the government should take steps to ensure beef supplies are not disrupted,” he said.

The bad news came as “yakiniku” restaurants were finally recovering from the 2001 domestic outbreak of mad cow.

Back then, the association’s member shops saw their sales drop by half or more, forcing many out of business.

But Nakai said the situation is more serious this time because if the ban remains in place for a considerable period of time, these restaurants will have little beef to sell.

Shares of McDonald’s Holdings fell 3 percent and Yoshinoya 9 percent in Wednesday stock trading.

Reins International Inc., which operates Gyukaku yakiniku restaurants, saw its shares lose almost 10 percent of their value.